Charity begins at home, or so we are told.
In fact, charities survive off endowments, investment income and grants as much as they do off standing orders and coins dropped in a box. But if there is one thing that surely defines a charity – and distinguishes it both from the for-profit and the state sectors – it is voluntary giving. No matter where the money immediately comes from, ultimately it can be traced back to an act of free (and altruistic) will. Right?
Not, apparently, for vast swathes of the UK charity sector. By 2010, over half of all charity income was derived from state and state-run bodies, and 27,000 charities relied on the state for more than three quarters of their income. No matter what ones view of taxation, one can hardly call it voluntary: it is a compulsory levy, and as such cannot, in any way, be considered “charitable”.
This might not be a problem if it just described charities receiving money from government to deliver services. Non-profit making private sector bodies, like their profit-making brethren, are often more efficient and more responsive to local circumstances than state and regional monopolies. Charities should be as free as any organisation to bid for government contracts, as long as this meets their charitable aims.
But what about the use of these funds to lobby government? Is it right that charities should use taxpayer money to campaign, even – perhaps – to campaign for more taxpayer funds? And what about charities that exist purely off taxpayer money, and exist primarily to lobby government?
A new report by Chris Snowdon, a Research Fellow at the Institute of Economic Affairs, examines this recent and murky practice. Sock Puppets: How the government lobbies itself and why argues that this represents a capture of Civil Society by politicians and bureaucrats. These latter groups are too-often assumed to pursue “the public interest”, whereas a large body of research demonstrates that in reality politicians and bureaucrats – like everybody else – pursue their self-interests. This should not always be assumed to be selfish (one point where I would fault Snowdon is his failure to acknowledge that “self-interest” can also include pursuing ones own values) but does nonetheless put them at odds with any general interest – and, indeed, democracy.
The capture of the charity sector by government is dangerous for a number of reasons. It provides small interest groups with disproportionate amounts of power and resources at the expense of taxpayers; it compels taxpayers to fund charities they do not support; it encourages the charities to focus upon the pursuit of state funding as a priority; and it mutes opposition (a concern raised by the National Council for Voluntary Organisations in 2001 and which I have witnessed in practice). A further danger, that Snowdon overlooks, is that government-funded lobbying organisations crowd-out real civil society groups; he certainly acknowledges that it is only the “politically correct” views (often those with little public support) that are funded.
Why does government do this? Feathering its own nest is one reason: government often funds bodies that argue for more bureaucracy, state intervention and taxation. But it also enables government to create “astro-turf” bodies that allow politicians to present unpopular, elitist issues as “grass-roots movements”. This subverts civil society, compromises the charity sector and undermines democracy.
The report makes four recommendations. Firstly, the government should stop giving unrestricted grants to charities; second, stop political advertising by government; third, require organisations that rely mainly on statutory funds to register as a new form of non-profit body, rather than appropriating the “charity” label that implies that they rely on voluntary funding; and fourth, restore the pre-Blair position of the Charity Commission that charitable status cannot apply to a body that is primarily concerned with lobbying.
Only then we will have a charity sector dominated by strong, independent voices speaking up for the people.